After planned sales tax rise in 2019, government eyes using ¥2 trillion a year to support child-rearing

The government is contemplating allocating nearly ¥2 trillion per year from consumption tax revenues to support child-rearing, a government source said Sunday.

How to spend revenue from a planned consumption tax hike in 2019 will likely become one of the key issues in the House of Representatives election that is expected to be held next month.

Prime Minister Shinzo Abe has pledged to boost spending on education and child care but where to secure the necessary funds is a headache for the government.

The government is scheduled to lift the tax rate to 10 percent from the current 8 percent in October 2019 and has said it will use a large portion of around ¥5 trillion in increased annual revenues from the tax hike to repay debt while the remainder will be spent on improving welfare policy.

The government is now considering reviewing the allocation to realize his pledge in strengthening support for child-rearing, the source said.

Abe is expected to hold a press conference Monday to announce a plan to dissolve the Lower House at the outset of an extraordinary Diet session to be convened Thursday.